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Can you simply reduce the value of all private companies in the UK? Scottish Mortgage and IPEV say yes.

Investment trust Scottish Mortgage, managed by Baillie Gifford, provided a simple solution in April by cutting the value of private companies in its portfolio to recognise the fact that private-company valuations are not insulated from public markets.

Adjusting the Gordon growth model for cross-border valuations

A new research study—‘International Valuation: A Proposed Method Using the Constant Perpetual Growth Model,’ by Thomas J. O’Brien (University of Connecticut—Department of Finance)—attempts to reduce valuation mistakes introduced by cross-border foreign exchange and cash-flow risks.

Global BV News: Proposed international valuation method using Gordon model

With the valuation of a going concern in mind, a newly proposed international valuation method uses the constant perpetual expected growth model (Gordon growth model).

BVU News and Trends April 2020

A monthly roundup of key developments of interest to business valuation experts.

New paper offers improvement to the Gordon growth model

“Capitalization 2.0—Terminal Value Under Changing Capital Structure” is a new paper by Mike Adhikari (Business ValueXpress Software), a valuation and M&A advisor.

BVU News and Trends November 2019

A monthly roundup of key developments of interest to business valuation experts.

Avoid this inconsistency with the terminal value

Terminal value calculations use a perpetuity model that, when using Gordon growth, assumes cash flows occur at the end of each year.

BVU News and Trends September 2019

A monthly roundup of key developments of interest to business valuation experts.

Free download of an improvement to the Gordon growth model

One of the benefits of attending BV conferences in person is that you can also pick up some interesting things outside the formal sessions, such as during networking events, in the exhibit hall, or in the local watering hole after a long day.

In Gatekeeper Role, Court Trains Attention on Expert Methodology, Not Conclusions

In ESOP case pivoting on valuation, court denies parties’ Daubert challenges; court notes “gatekeeping” means focusing “on principles and methodology, not the conclusions that [the experts] generate”; parties’ objections are mostly quarrels with opposing expert’s conclusions, court finds.

Acosta v. Wilmington Trust, N.A. (I) (Graphite)

In ESOP case pivoting on valuation, court denies parties’ Daubert challenges; court notes “gatekeeping” means focusing “on principles and methodology, not the conclusions that [the experts] generate”; parties’ objections are mostly quarrels with opposing expert’s conclusions, court finds.

DFC Global Corp. v. Muirfield Value Partners, L.P. (II)

State Supreme Court declines to create presumption for appraisal actions that deal price is best indicator of value when merger was arm’s-length transaction, but court finds Chancery’s valuation approach lacked support in record and requires revaluation.

Control Premium Not Needed for DCF Analysis Using Gordon Growth Model

One of the issues was whether the board’s financial advisor, Credit Suisse First Boston (First Boston), correctly excluded a control premium in its assessment of the company’s value and, thus, whether the board failed to reasonably consider the value of all relevant alternatives.

In re Toys “R” Us, Inc., Shareholder Litigation

One of the issues was whether the board’s financial advisor, Credit Suisse First Boston (First Boston), correctly excluded a control premium in its assessment of the company’s value, and, thus, whether the board failed to reasonably consider the value of ...

Valuation Report - Seminole Manufacturing Co.

This case involved the valuation of decedent's approximately 20% of the stock of Seminole Manufacturing Co.

Computing terminal value

In reviewing the Cost of Capital book, page 16, we noted Dr. Pratt's comments about the error in treating EBITDA as free cash flow. We also noted that Dr. Pratt utilizes net cash flow in his discussion of the Gordon Growth Model and the Two-Stage Model shown on pages 25 to 29.

Mid-year discounts redux

In "Mid-year discounts," p. 5 of February 2001 BVU, you said, "its proper to use the Gordon Growth Model for the terminal value and then discount that terminal value by N years, not N-0.5 ...

Mid-year discounts

Duvall again correctly demonstrates that, if you use mid-year discounting, it's proper to use the Gordon Growth Model for the terminal value and then discount that terminal value by N years, not N - 0.5 years years.

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